March consumer confidence dips, inflation view up
Reuters) – Consumer confidence dipped in March, while Americans ratcheted up their inflation expectations to the highest level in 10 months, according to a private sector report released on Tuesday.
The Conference Board, an industry group, said its index of consumer attitudes eased to 70.2 from an upwardly revised 71.6 the month before. Economists had expected a reading of 70.3, according to a Reuters poll.
February’s figure was originally reported as 70.8.
The expectations index fell to 83.0 from 88.4, though the present situation gauge gained to its highest level since September 2008 at 51.0 from 46.4.
The improvement in consumers’ view of their present situation suggests that they still feel the economy is not losing momentum, Lynn Franco, director of The Conference Board Consumer Research Center, said in a statement.
Expectations for inflation in the coming 12 months jumped to 6.3 percent from 5.5 percent. It was the highest level since May 2011.
Consumers’ labor market assessment was mixed. The “jobs hard to get” index rose to 41.0 percent from 38.6 percent the month before, but the “jobs plentiful” index also rose to 9.4 percent from 7.0 percent.
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FHA To Need Another Bailout
The Federal Housing Administration won’t be able to earn its way to financial health this year, increasing the chance it will need a taxpayer bailout, based on an updated forecast from Moody’s Analytics, which provides the agency’s housing-market analysis.
The U.S. government mortgage-insurer, which guarantees $1.1 trillion in home loans, had been counting on “robust growth” in home prices to help rebuild its insurance fund after paying out $37 billion to cover defaults the past three years, according to its annual report to Congress, filed in November.
It won’t get that growth until 2014, according to the latest outlook from Moody’s Analytics. Prices will fall 3 percent in fiscal 2012 before growing 1.4 percent in 2013 and 6.5 percent in 2014, said Celia Chen, a Moody’s Analytics housing economist who updated her estimate after providing the housing-market forecast for the FHA’s annual actuarial report.
“The FHA’s economic projections are surreal,” said Andrew Caplin, a New York University economics professor who has testified to Congress on the agency’s finances. “They must believe there will be very few readers in Congress able to critically review such a complex report.”
In their annual review, the FHA’s actuaries — risk analysts who specialize in insurance — used earlier projections that called for increases of 1.2 percent in 2012 and 3.8 percent in 2013. The agency, which backs mortgages that cover as much as 96.5 percent of a home’s value, is sensitive to changes in home prices. While the insurance fund’s 2012 outlook called for net growth of about $9 billion, that will drop if home prices decline, according to the FHA’s November report.
By law, the fund is supposed to hold 2 percent of its portfolio in reserve; as of Sept. 30, it held only 0.24 percent, or $2.6 billion, according to the report…..
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U.S. stock futures were little changed, after a rally that drove the Standard & Poor’s 500 Index to the highest level since 2008, as investors awaited data that may show consumer confidence held near a one-year high.
Bank of America Corp. slipped 0.8 percent after its shares were downgraded by Robert W. Baird & Co. Apollo Group Inc. (APOL), the biggest U.S. for-profit college company, slumped 6.2 percent amid concern over new enrollments. Lennar Corp. (LEN), the third- largest U.S. homebuilder by revenue, and Walgreen Co. (WAG), the biggest U.S. drugstore chain, advanced at least 2.3 percent as earnings exceeded analysts’ projections.
&P 500 futures expiring in June retreated less than 0.1 percent to 1,414.50 at 9:16 a.m. New York time. The benchmark measure for American equities had gained 1.7 percentover the previous two days. Dow Jones Industrial Average futures slipped 4 points, or less than 0.1 percent, to 13,196 today.
Equity futures swung between gains and losses before data that may show consumer confidence in March fell as gas prices climbed. Home prices in 20 U.S. cities dropped at a slower pace in January, pointing to stabilization in the real estate market, a report showed.
The S&P 500 yesterday erased last week’s decline after Federal Reserve Chairman Ben S. Bernanke said that accommodative monetary policy is still needed to spur jobs. The index has risen 3.7 percent in March, poised for a fourth straight monthly gain, the longest winning streak since 2009. It trades for 14.6 times (SPX) reported earnings, the highest valuation level since July while still below the average since 1954 of 16.4…